China Plans Major Pharma Investment to Neutralize Foreign Imports

Seeking to counter the country’s growing reliance on foreign drug imports, China’s government is planning massive investment in its own pharmaceutical industry over the next seven years. Chinese pharmaceutical giants most likely to benefit from the plan include Jiangsu Hengrui Medicine, CSPC Pharmaceutical Group Limited, and Hong Kong-based Sino Biopharm.

As part of its “Made in China 2025” industrial plan, China is encouraging domestic companies to consolidate into larger firms and pump more money into research and development. It is also moving to approve new drugs for the Chinese market more quickly. These steps, along with massive government investment and other policy reforms, are designed by China to open space in the pharmaceutical market for its own domestic players.

The moves could create a market shake up. For years, China’s rapidly aging society and vast economy have been a bonanza for foreign pharmaceutical firms. China was the world’s second largest pharmaceutical market last year, worth $122.6 billion. It is poised to reach as much as $175 billion by 2022. But homegrown companies have a long way to go to catch up with foreign pharmaceutical manufacturers. Jiangsu Hengrui, China’s largest listed pharmaceutical company, has a market capitalization of $35 billion, which is only about a tenth of Johnson & Johnson’s.